Abbreviations | The Economist W Abbreviations Unless an abbreviation or acronym is so familiar that it is used more often than the full form (eg, AIDS, BBC, CIA, FBI, HIV, IMF, NATO, NGO, OECD, UNESCO), or unless the full form would provide little illumination (eg, AWACS, DNA) write the words in full on first appearance: thus, Trades Union Congress (not TUC). If in doubt about its familiarity, explain what the organisation is or does. After the first mention, try not to repeat the abbreviation too often; so write the agency rather than the IAEA, the party rather than the KMT, to avoid spattering the page with capital letters. There is no need to give the initials of an organisation if it is not referred to again. If an abbreviation can be pronounced (eg, EFTA, NATO, UNESCO), it does not generally require the definite article. Other organisations, except companies, should usually be preceded by the (the BBC, the KGB, the NHS, the UNHCR and the NIESR).

Abbreviations that can be pronounced and are composed of bits of words rather than just initials should be spelt out in upper and lower case: Cocom, Frelimo, Kfor, Legco, Mercosur, Nepad, Renamo, Sfor, Unicef, Unison, Unprofor, Trips (trade-related aspects of intellectual property rights). There is generally no need for more than one initial capital letter, unless the word is a company or a trade name: MiG, ConsGold. Do not use spatterings of abbreviations and acronyms simply in order to cram more words in; you will end up irritating readers rather than informing them. An article in a recent issue of The Economist contained the following: DNI, CIA, NSA, DOD, FBI, NCTC, DCI and, for good measure, DVD. The article immediately following had: MI5, MI6, GCHQ, C, JTAC, R, JIC, CX, CTAC, IT, SCOPE, MP, DIS, FCO and, for good measure, WMD. Some of these are well known to most readers and can readily be held in the mind.

But unfamiliar abbreviations may oblige the reader to be constantly referring back to the first use. Better to repeat some names in full, or to write the agency, the committee, the party etc, than to allow an undisciplined proliferation. In bodymatter, all such abbreviations, whether they can be pronounced as words or not (GNP, GDP, FOB, CIF, A-levels, D-marks, T-shirts, X-rays), should be set in small capitals, with no points—unless they are currencies like Nkr or SFr, elements like H and O or degrees of temperature like °F and °C. Brackets, apostrophes and all other typographical furniture accompanying small capitals are generally set in ordinary roman, with a lower-case s (also roman) for plurals and genitives. Thus IOUS, MPs' salaries, SDRS, etc. But ampersands are set as small capitals, as are numerals and any hyphens attaching them to a small capital. Thus R&D, A23, M1, F-16, etc.

Abbreviations that include upper- and lower-case letters must be set in a mixture of small capitals and roman: BPhils, PhDs. Prefer chief executive or boss to CEO. Do not use small caps for roman numerals. In headings, rubrics, cross-heads, footnotes, flytitles, captions, tables, charts (including sources), use ordinary caps, not small caps. Use lower case for kg, km, lb (never lbs), mph and other measures, and for ie and eg, which should both be followed by commas. When used with figures, these lower-case abbreviations should follow immediately, with no space (11am, 4.30pm, 15kg, 35mm, 100mph, 78rpm), as should AD and BC and (76AD, 55BC), and figures and numbers thus joined should both be set in small capitals. Two abbreviations together, however, must be separated: 60m b/d. Prefer b/d to bpd as an abbreviation for barrels per day.

Most scientific units, except those of temperature, that are named after individuals should be set in small capitals, though any attachments denoting multiples go in lower case. Thus a watt is W, whereas kilowatt, milliwatt and megawatt, meaning 1,000 watts, one thousandth of a watt and 1m watts, are abbreviated to kW, mW and mW (k, m and M are standard international metric abbreviations for thousand, thousandth and million). The elements are not scapped. Lead is Pb, carbon dioxide is CO2, methane is CH4. Chlorofluorocarbons are, however, CFCs, and the oxides of nitrogen are generally NOX. Different isotopes of the same element are distinguished by raised prefixes: carbon-14 is 14C, helium-3 is 3He. Most upper-case abbreviations take upper-case initial letters when written in full (eg, the LSO is the London Symphony Orchestra), but there are exceptions: CAP but common agricultural policy, EMU but economic and monetary union, GDP but gross domestic product, PSBR but public-sector borrowing requirement, VLSI but very large-scale integration.

Initials in people's names, or in companies named after them, take points (with a space between initials and name, but not between initials). Thus F.W. de Klerk, V.P. Singh, E.I. du Pont de Nemours, F.W. Woolworth. In general, follow the practice preferred by people, companies and organisations in writing their own names. Do not use Prof, Sen, Col, etc. Lieut-Colonel and Lieut-Commander are permissible. So is Rev, but it must be preceded by the and followed by a Christian name or initial: the Rev Jesse Jackson (thereafter Mr Jackson). See Clerical titles . Always spell out page, pages, hectares, miles. But kilograms (not kilogrammes) and kilometres can be shortened to kg (or kilos) and km. Miles per hour are mph and kilometres per hour are kph.

Ampersands should be used (1) when they are part of the name of a company (eg, AT&T, Pratt & Whitney); (2) for such things as constituencies where two names are linked to form one unit (eg, The rest of Brighouse & Spenborough joins with the Batley part of Batley & Morley to form Batley & Spen. Or The area thus became the Pakistani province of Kashmir and the Indian state of Jammu & Kashmir); (3) in R&D and S&L. Remember that EFTA is the European Free-Trade Association, the FAO is the Food and Agriculture Organisation, the FDA is the Food and Drug Administration, IDA is the International Development Association, the MFA is the Multi-Fibre Arrangement, NAFTA is the North American Free-Trade Agreement (just as CAFTA is the Central American Free-Trade Agreement), the OAU was the Organisation of African Unity (now the African Union), the PLO is the Palestine Liberation Organisation. Remember, too, that the V of HIV stands for virus, so do not write HIV virus.

Members of Parliament are MPs: of the Scottish Parliament, MSPs; and of the European Parliament, MEPs (not Euro-MPs). Except in the Britain section, use MP only after first spelling out member of Parliament in full (in many places an MP is a military policeman). Spell out in full (and lower case) junior and senior after a name: George Bush junior, George Bush senior. A four-by-four vehicle can be a 4x4.

Advertisement Abbreviations In Economics In Depth Tutorials and Information Abbreviations In Economics AARCH augmented autoregressive conditional heteroscedasticity AC advanced country ACAS Advisory, Conciliation and Arbitration Service ACH automated clearinghouse ACM Andean Common Market; Arab Common Market ACP African, Caribbean and Pacific ACRS Accelerated Cost Recovery System ACT advanced corporation tax AESOP all-employee share ownership plan (UK) AFBD Association of Futures Brokers and Dealers (London) AfDB African Development Bank AFDC Aid to Families with Dependent Children AFL-CIO American Federation of Labor and Congress of Industrial Organizations AG Aktiengesellschaft AGNP augmented gross national product AIBD Association of International Bond Dealers AIM Alternative Investment Market (London) ALC Australian Loan Council AOSIS Alliance of Small Island States APACS Association for Payment Clearing Services APB Accounting Principles Board (UK) APC average propensity to consume APCIMS Association of Private Client Investment Managers and Stockbrokers APR average percentage rate (of interest) ARCH autoregressive conditional heteroscedasticity Ariel Automated Real-time Investment Exchange ARIMA autoregressive integrated moving average ARM adjustable rate mortgage ASEAN Association of South East Asian Nations ATM automated teller machine; air transport movement ATP Aid and Trade Provisions

 ATS automatic transfer from a savings account; automatic transfer service account BACS Banks Automated Clearing System (UK) BAT best available technology BCEAO Banque Centrale des Etats de l’Afrique de l’Ouest (Central Bank of West African States) b/d barrels per day BDI Bundesverrand der deutschen Industrie BDR British Depository Receipt BEA Bureau of Economic Analysis (USA) BERD La banque europeenne pour la reconstruction et la developpe-ment (European Bank for Reconstruction and Development) BIDS British Institute of Dealers in Securities BIS Bank for International Settlements BNB basic needs budget BOF Balance for Official Financing BOY beginning of the year (or of an accounting period) bp base points (of an interest rate) BP balance of payments BRITE Basic research in industrial technologies for Europe C aggregate consumption CA confluence analysis; chartered accountant CAC Central Arbitration Committee; Consumer Advisory Council (USA) CACM Central American Common Market CAP Common Agricultural Policy CAPM capital asset pricing model CAR compounded annual rate (of interest) CARICOM Caribbean Community CARIFTA Caribbean Free Trade Area CAT Charges, Access, Terms CBD central business district (of a city) CBI Caribbean Basin Initiative; Confederation of British Industry CBO

 Congressional Budget Office (USA) CBOE Chicago Board Options Exchange CC Competition Commission (UK) CCC Commodity Credit Corporation (USA); Competition and Credit Control (UK) CCT compensating common tariff; compulsory competitive tendering CD Certificate of Deposit CEA Council of Economic Advisers CEAO Communaute Economique de l’Afrique de l’Ouest CEC Commission of the European Communities CENIS Centre for International Studies CEMAC Communaute Economique et Monetaire en Afrique Centrale (Central African Economic and Monetary Community) CEO Chief Executive Officer CEPAL Commision Economica para America Latina CEPGL Communite economique des Pays des Grands Lacs CES constant elasticity of substitution CET common external tariff CETA Comprehensive Employment and Training Act CEV constant elasticity of variance CFA Communaute Financiere Africaine; chartered financial analyst CFF compensatory financial facility CFTC Commodity Futures Trading Commission CGE computable general equilibrium CHAPS Clearing House Automatic Payments System (UK) CHIPS Clearing House Interbank Payments System (New York) c.i.f.

cost, insurance, freight CIR Commission on Industrial Relations (UK) CIS cash incentive scheme CITES Convention on International Trade in Endangered Species CMB Cash Management Bill CMEA Council for Mutual Economic Aid CMO collateralized mortgage obligation CMSA Consolidated Metropolitan Statistical Area CO Certification Officer COB Commission des Operations de Bourse (the Stock Exchange Commission of France) COLA cost of living adjustment Comex Commodity Exchange of New York CONSOB Commissione nazionale per la societa e la borsa (the Stock Exchange Commission of Italy, founded 1974) CPE centrally planned economy EONIA Euro overnight index average EP export promotion ERA effective rate of assistance; exchange rate agreement ERDF European Regional Development Fund ERM Exchange Rate Mechanism ERP European Recovery Program (‘Marshall Aid’) ESA European System of Accounts ESOP Employee Stock Ownership Plan ETAS Economic Trends Annual Survey (UK) EU expected utility; European Union EUA European Unit of Account EURIBOR EuroInterBank offered rate FAO Food and Agricultural Organization FAS free alongside ship FCC Federal Communications Commission (USA) FCO Federal Cartel Office (USA) FDI foreign direct investment FDIC Federal Deposit Insurance Corporation Fed Federal Reserve System FES Family Expenditure Survey (UK) F

IBS financial information and budgeting systems FIFG Financial Instrument for Fisheries Guidance (EU) FIFO first in, first out FIGARCH fractionally integrated generalized autoregressive conditional heteroscedasticity Fimbra Financial Intermediaries, Managers and Brokers Regulatory Association (London) FIML full information maximum likelihood FOB free on board FOMC Federal Open Market Committee FPE factor price equalization FSA Financial Services Act; Food Standards Agency (UK) FSB Federation of Small Businesses (UK) FSBR Financial Statement and Budget Report (UK) FSLIC Federal Savings and Loan Insurance Corporation FTC Federal Trade Corporation; Federal Trade Commission Act FTO foreign trade organization FTSE 100 Financial Times Stock Exchange 100 Share Index FTZ free trade zone G3 Group of Three (Germany, Japan, USA) G7 Group of Seven (Canada, France, Germany, Italy, Japan, UK, USA) G8 Group of Eight (G7 plus Russia) GAB General Agreement to Borrow GAO General Accounting Office (USA) GAR guaranteed annuity rate GARCH generalized autoregressive conditional heteroscedasticity GATS General Agreement on Trade in Services GATT General Agreement on Tariffs and Trade GDP gross domestic product IATA International Air

 Travel Association IBEC International Bank for European Co-operation IBEL interest-bearing eligible liability IBRD International Bank for Reconstruction and Development ICC income-consumption curve; Interstate Commerce Commission (USA) ICCH International Commodities Clearing House ICFC International and Commercial Finance Corporation ICOR incremental capital-output ratio ICSID International Centre for Settlement of Investment Disputes ICU International Clearing Union IDB Inter-American Development Bank; inter-dealer broker IEA Institute of Economic Affairs (UK); International Energy Agency IET interest equalization tax IFS Institute for Fiscal Studies (UK) IGARCH integrated generalized autoregressive conditional heteroscedasti-city IIB International Investment Bank IIF Institute for International Finance ILO International Labour Office N The quantity of employment NAFA net acquisition of financial assets NAFTA North American Free Trade Area NAIC National Association of Insurance Commissioners (USA) NAIRU non-accelerating inflation of unemployment NAMU North American Monetary Union NARCH non-linear autoregressive conditional heteroscedasticity NASDAQ National Association of Securities Dealers Automated Quotation System (USA) NASDIM National Association of Securities Dealers and Investment Managers NAV net asset value NBER National Bureau of Economic Research (USA) NBPI National Board for Prices and Incomes (UK) NDP net domestic product NE

B National Enterprise Board (UK) NEDC National Economic Development Council (UK) NEDO National Economic Development Office (UK) NEP New Economic Policy (Soviet Union) NEW net economic welfare PPP purchasing power parity; public-private partnership PQLI physical quality of life index PRF population regression function PRP performance-related pay; profit-related pay PRT petroleum revenue tax PSA public service agreement (UK) PSBR public sector borrowing requirement PSDR public sector debt repayment PSE public service employment PSL private sector liquidity (UK) PSNB public sector net borrowing PTA preferential trading arrangement; preferential trade agreement QALY quality-adjusted life years QARCH quadratic autoregressive conditional heteroscedasticity QR quantitative restrictions QTARCH qualitative threshold autoregressive conditional heteroscedasti-city r coefficient of correlation RD reserve deposits (of a bank) R&D research and development RDA Regional Development Agency (England) RD and D research, development and demonstration RE rational expectations RTC Resolution Trust Corporation (USA) RTM rent to mortgage SA Societe anonyme (French, Belgian, Luxemburgese or Swiss public company) SACU South African Customs Union SADCC South African Development Co-ordination Committee Sarl Societe a responsabilite limite (French

 private limited company) SAYE save as you earn (UK scheme) SBA Small Business Administration (USA) SCOPE System Committee on Paperless Entry SCP structure-conduct-performance SEAQ Stock Exchange Automated Quotation System (UK) SEC Securities and Exchange Commission (UK) SEM special employment measures SEPON Stock Exchange Pool Nominees (UK) SERPS State Earnings-related Pension Scheme SETS Stock Exchange Electronic Trading Service (UK) SFA Securities and Futures Authority (UK) SIB Securities and Investments Board (UK) SIBOR Singapore Inter-Bank Offered Rate SIC Standard Industrial Classification SIMEX Singapore International Monetary Exchange SIP state implementation plan (US pollution control) SITC Standard International Trade Classification SLM segmented labour market SME small and medium-sized enterprise SMSA Standard Metropolitan Statistical Area SNA System of National Accounts (United Nations) SNB Swiss National Bank (Switzerland’s central bank) SNIG sustained non-inflationary growth SOE state-owned enterprise; small open economy S&P 500 Standard & Poor 500 SRD Statutory Reserve Deposit TVA Tennessee Valley Authority; taxe sur lavaleur ajoutee (the French value-added tax) TWER trade-weighted exchange rate UBR uniform business rate UDEAC Union Douaniere

 et Economique des Etats de l’Afrique Centrale (Central African Customs and Economic Union) UEMOA Union economique et monetaire de l’Afrique de l’Ouest (West African Economic and Monetary Union) UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Change UNIDO United Nations Industrial Development Organization UPF utility possibility frontier; Uniform Presentation Framework (Australia) USM Unlisted Securities Market UTV utility theory of value UVI unit value index Economics A-Z terms beginning with A | The Economist Economics A-Z terms beginning with A A Average Absolute advantage This is the simplest yardstick of economic performance.

If one person, firm or country can produce more of something with the same amount of effort and resources, they have an absolute advantage over other producers. Being the best at something does not mean that doing that thing is the best way to use your scarce economic resources. The question of what to specialise in--and how to maximise the benefits from international trade--is best decided according to comparative advantage . Both absolute and comparative advantage may change significantly over time. Adaptive expectations A theory of how people form their views about the future that assumes they do so using past trends and the errors in their own earlier predictions. Contrast with rational expectations . Adverse selection When you do business with people you would be better off avoiding. This is one of two main sorts of market failure often associated with insurance. The other is moral hazard . Adverse selection can be a problem when there is asymmetric information between the seller of insurance and the buyer; in particular, insurance will often not be profitable when buyers have better information about their risk of claiming than does the seller. Ideally, insurance premiums should be set according to the risk of a randomly selected person in the insured slice of the population (55-year-old male smokers, say).

In practice, this means the average risk of that group. When there is adverse selection, people who know they have a higher risk of claiming than the average of the group will buy the insurance, whereas those who have a below-average risk may decide it is too expensive to be worth buying. In this case, premiums set according to the average risk will not be sufficient to cover the claims that eventually arise, because among the people who have bought the policy more will have above-average risk than below-average risk. Putting up the premium will not solve this problem, for as the premium rises the insurance policy will become unattractive to more of the people who know they have a lower risk of claiming. One way to reduce adverse selection is to make the purchase of insurance compulsory, so that those for whom insurance priced for average risk is unattractive are not able to opt out. Advertising Many firms advertise their goods or services, but are they wasting economic resources? Some economists reckon that advertising merely manipulates consumer tastes and creates desires that would not otherwise exist. By increasing product differentiation and encouraging brand loyalty advertising may make consumers less price sensitive, moving the market further from perfect competition towards imperfect competition (see monopolistic competition ) and increasing the ability of firms to charge more than marginal cost.

Heavy spending on advertising may also create a barrier to entry, as a firm entering the market would have to spend a lot on advertising too. However, some economists argue that advertising is economically valuable because it increases the flow of information in the economy and reduces the asymmetric information between the seller and the consumer. This intensifies competition, as consumers can be made aware quickly when there is a better deal on offer. Agency costs These can arise when somebody (the principal) hires somebody else (the agent) to carry out a task and the interests of the agent conflict with the interests of the principal. An example of such principal-agent problems comes from the relationship between the shareholders who own a public company and the managers who run it. The owners would like managers to run the firm in ways that maximise the value of their shares, whereas the managers' priority may be, say, to build a business empire through rapid expansion and mergers and acquisitions , which may not increase their firm's share price. One way to reduce agency costs is for the principal to monitor what the agent does to make sure it is what he has been hired to do. But this can be costly, too. It may be impossible to define the agent's job in a way that can be monitored effectively.

For instance, it is hard to know whether a manager who has expanded a firm through an acquisition that reduced its share price was pursuing his own empire-building interests or, say, was trying to maximise shareholder value but was unlucky. Another way to lower agency costs, especially when monitoring is too expensive or too difficult, is to make the interests of the agent more like those of the principal. For instance, an increasingly common solution to the agency costs arising from the separation of ownership and management of public companies is to pay managers partly with shares and share options in the company. This gives the managers a powerful incentive to act in the interests of the owners by maximising shareholder value. But even this is not a perfect solution. Some managers with lots of share options have engaged in accounting fraud in order to increase the value of those options long enough for them to cash some of them in, but to the detriment of their firm and its other shareholders. See, for example, Enron .

Agricultural policy Countries often provide support for their farmers using trade barriers and subsidy because, for example: *domestic agriculture, even if it is inefficient by world standards, can be an insurance policy in case it becomes difficult (as it does, for example, in wartime) to buy agricultural produce from abroad; *farmers groups have proved adept at lobbying; *politicians have sought to slow the depopulation of rural areas; *agricultural prices can be volatile, as a result of unpredictable weather, among other things; and *financial support can provide a safety net in unexpectedly severe market conditions. Broadly speaking, governments have tried two methods of subsidising agriculture. The first, used in the United States during the 1930s and in the UK before it joined the European Union, is to top up farmers' incomes if they fall below a level deemed acceptable. Farmers may be required to set aside some of their land in return for this support. The second is to guarantee a minimum level of farm prices by buying up surplus supply and storing or destroying it if prices would otherwise fall below the guaranteed levels. This was the approach adopted by the EU when it set up its Common Agricultural Policy.

To keep down the direct cost of this subsidy the EU used trade barriers, including import levies, to minimise competition to EU farmers from produce available more cheaply on world agriculture markets. Recent American farm-support policy has combined income top-ups and some guaranteed prices. As most governments have become more committed to international trade, such agricultural policies have come under increasing attack, although the free trade rhetoric has often run far ahead of genuine reform. In 2003, rich countries together spent over $300 billion a year supporting their farmers, more than six times what they spent on foreign AID . Finding a way to end agricultural support had become by far the biggest remaining challenge for those trying to negotiate global free trade . Agriculture Farming around the world continues to become more productive while generally accounting for a smaller share of employment and national income , although in some poor countries it remains the sector on which the country and its people depend. Farming, forestry and fishing in 1913 accounted for 28% of employment in the United States, 41% in France and 60% in Japan, but only 12% in the UK.

Now the proportion of the workforce employed in such activities has dropped below 6% in these and most other industrialised countries. The total value of international trade in agriculture has risen steadily. But the global agriculture market remains severely distorted by trade barriers and government subsidy, such as the european union 's Common agricultural policy . Aid See international aid . Altruism It is often alleged that altruism is inconsistent with economic rationality, which assumes that people behave selfishly. Certainly, much economic analysis is concerned with how individuals behave, and homo economicus ( economic man ) is usually assumed to act in his or her self-interest. However, self-interest does not necessarily mean selfish. Some economic models in the field of behavioural economics assume that self-interested individuals behave altruistically because they get some benefit, or utility , from doing so. For instance, it may make them feel better about themselves, or be a useful insurance policy against social unrest, say. Some economic models go further and relax the traditional assumption of fully rational behaviour by simply assuming that people sometimes behave altruistically, even if this may be against their self-interest. Either way, there is much economic literature about charity, international aid , public spending and redistributive taxation.

Amortisation The running down or payment of a loan by instalments. An example is a repayment mortgage on a house, which is amortised by making monthly payments that over a pre-agreed period of time cover the value of the loan plus interest . With loans that are not amortised, the borrower pays only interest during the period of the loan and then repays the sum borrowed in full. Animal spirits The colourful name that keynes gave to one of the essential ingredients of economic prosperity: confidence. According to Keynes, animal spirits are a particular sort of confidence, "naive optimism". He meant this in the sense that, for entrepreneurs in particular, "the thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death". Where these animal spirits come from is something of a mystery. Certainly, attempts by politicians and others to talk up confidence by making optimistic noises about economic prospects have rarely done much good. Antitrust government policy for dealing with monopoly . Antitrust laws aim to stop abuses of market power by big companies and, sometimes, to prevent corporate mergers and acquisitions that would create or strengthen a monopolist.

There have been big differences in antitrust policies both among countries and within the same country over time. This has reflected different ideas about what constitutes a monopoly and, where there is one, what sorts of behaviour are abusive. In the United States, monopoly policy has been built on the Sherman Antitrust Act of 1890. This prohibited contracts or conspiracies to restrain trade or, in the words of a later act, to monopolise commerce. In the early 20th century this law was used to reduce the economic power wielded by so-called "robber barons", such as JP Morgan and John D. Rockefeller, who dominated much of American industry through huge trusts that controlled companies' voting shares. Du Pont chemicals, the railroad companies and Rockefeller's Standard Oil, among others, were broken up. In the 1970s the Sherman Act was turned (ultimately without success) against IBM, and in 1982 it secured the break-up of AT&T's nationwide telecoms monopoly. In the 1980s a more laissez-faire approach was adopted, underpinned by economic theories from the chicago school .

These theories said that the only justification for antitrust intervention should be that a lack of competition harmed consumers, and not that a firm had become, in some ill-defined sense, too big. Some monopolistic activities previously targeted by antitrust authorities, such as predatory pricing and exclusive marketing agreements, were much less harmful to consumers than had been thought in the past. They also criticised the traditional method of identifying a monopoly, which was based on looking at what percentage of a market was served by the biggest firm or firms, using a measure known as the herfindahl-hirschman index . Instead, they argued that even a market dominated by one firm need not be a matter of antitrust concern, provided it was a contestable market. In the 1990s American antitrust policy became somewhat more interventionist. A high-profile lawsuit was launched against Microsoft in 1998. The giant software company was found guilty of anti-competitive behaviour, which was said to slow the pace of innovation. However, fears that the firm would be broken up, signalling a far more interventionalist American antitrust policy, proved misplaced. The firm was not severely punished.

In the UK, antitrust policy was long judged according to what policymakers decided was in the public interest. At times this approach was comparatively permissive of mergers and acquisitions; at others it was less so. However, in the mid-1980s the UK followed the American lead in basing antitrust policy on whether changes in competition harmed consumers. Within the rest of the european union several big countries pursued policies of building up national champions, allowing chosen firms to enjoy some monopoly power at home which could be used to make them more effective competitors abroad. However, during the 1990s the European Commission became increasingly active in antitrust policy, mostly seeking to promote competition within the EU. In 2000, the EU controversially blocked a merger between two American firms, GE and Honeywell; the deal had already been approved by America's antitrust regulators. The controversy highlighted an important issue. As globalisation increases, the relevant market for judging whether market power exists or is being abused will increasingly cover far more territory than any one single economy. Indeed, there may be a need to establish a global antitrust watchdog, perhaps under the auspices of the world trade organisation .

Appreciation A rise in the value of an asset and the opposite of depreciation . When the value of a currency rises relative to another, it appreciates. Arbitrage Buying an asset in one market and simultaneously selling an identical asset in another market at a higher price. Sometimes these will be identical assets in different markets, for instance, shares in a company listed on both the London Stock Exchange and New York Stock Exchange. Often the assets being arbitraged will be identical in a more complicated way, for example, they will be different sorts of financial securities that are each exposed to identical risks . Some kinds of arbitrage are completely risk-free-this is pure arbitrage. For instance, if EUROS are available more cheaply in dollars in London than in New York, arbitrageurs (also known as arbs) can make a risk-free PROFIT by buying euros in London and selling an identical amount of them in New York. Opportunities for pure arbitrage have become rare in recent years, partly because of the GLOBALISATION of FINANCIAL MARKETS . Today, a lot of so called arbitrage, much of it done by hedge funds , involves assets that have some similarities but are not identical.

This is not pure arbitrage and can be far from risk free. Arbitrage pricing theory This is one of two influential economic theories of how assets are priced in the financial markets. The other is the capital asset pricing model . The arbitrage pricing theory says that the price of a financial asset reflects a few key risk factors, such as the expected rate of interest , and how the price of the asset changes relative to the price of a portfolio of assets. If the price of an asset happens to diverge from what the theory says it should be, arbitrage by investors should bring it back into line. Asian crisis During 1997-98, many of the East Asian tiger economies suffered a severe finanical and economic crisis. This had big consequences for the global financial markets , which had become increasingly exposed to the promise that Asia had seemed to offer. The crisis destroyed wealth on a massive scale and sent absolute poverty shooting up. In the banking system alone, corporate loans equivalent to around half of one year's GDP went bad - a destruction of savings on a scale more usually associated with a full-scale war. The precise cause of the crisis remains a matter of debate.

Fingers have been pointed at the currency peg adopted by some countries, and a reduction of capital controls in the years before the crisis. Some blamed economic contagion . The crisis brought an end to a then widespread belief that there was a distinct "Asian way" of capitalism that might prove just as successful as capitalism in America or Europe. Instead, critics turned their fire on Asian cronyism, ill-disciplined banking and lack of transparency . In the years following the crisis, most of the countries involved have introduced reforms designed to increase transparency and improve the health of the banking system, although some (such as South Korea) went much further than others (such as Indonesia). Assets Things that have earning power or some other value to their owner. Asymmetric information When somebody knows more than somebody else. Such asymmetric information can make it difficult for the two people to do business together, which is why economists, especially those practising game theory , are interested in it. Transactions involving asymmetric (or private) information are everywhere. A government selling broadcasting licences does not know what buyers are prepared to pay for them; a lender does not know how likely a borrower is to repay; a used-car seller knows more about the quality of the car being sold than do potential buyers.

This kind of asymmetry can distort people's incentives and result in significant inefficiencies. Asymmetric shock When something unexpected happens that affects one economy (or part of an economy) more than the rest. This can create big problems for policymakers if they are trying to set a macroeconomic policy that works for both the area affected by the shock and the unaffected area. For instance, some economic areas may be oil exporters and thus highly dependent on the price of oil, but other areas are not. If the oil price plunges, the oil-dependent area would benefit from policies designed to boost demand that might be unsuited to the needs of the rest of the economy. This may be a constant problem for those responsible for setting the interest rate for the euro given the big differences--and different potential exposures to shocks--among the economies within the euro zone . Auctions Going, going, gone. Holding an auction can be an extremely efficient way for a seller to set the price of its products, especially if it does not have much information about how much people may be willing to pay for them. Auctions fascinate economists, especially those who specialise in game theory .

They have long been a feature of the sale of art and antiques in the rooms of firms such as Sotheby's and Christie's. But in recent years they have played a growing role in other parts of the economy, ranging from the allocation of government -controlled broadcasting bandwidth to the awarding of work to subcontractors by governments and big firms using competitive tendering, and even more recently the sale of goods over the Internet. An English auction is the most familiar. Bidders compete to offer higher prices and drop out until only one remains. In a Dutch auction, the auctioneer calls out a high price then keeps lowering it until there is a buyer. There are various forms of sealed bid auctions. In a first price sealed bid, each buyer submits a price in a sealed envelope and all bids are opened simultaneously, with the highest offer winning. In a second (or third, fourth, and so on) price sealed bid, the highest bidder wins but pays only the second (third, fourth) highest price bid. An English or Dutch auction will work well for a seller if there is more than one serious bidder, as competition will ensure that the price is set at the level at which it is not worth more to any other bidder but the winner.

Indeed, in a competitive auction the successful bidder may end up offering more than what is being auctioned is actually worth. This is known as the winner's curse. Which method will generate the best price for the seller depends on how many bidders take part and how well informed they are. Unfortunately for the seller, this information is not always available before the auction takes place. Austrian economics A brand of neo-classical economics established in Vienna during the late 19th century and the first half of the 20th century. It was strongly opposed to Marxism and, more broadly, to the use of economic theories to justify government intervention in the economy. Prominent members included Friedrich hayek , Joseph schumpeter and Ludwig von Mises. It gave birth to the definition of economics as the science of studying human behaviour as a relationship between ends and scarce means that have alternative uses. Austrian economic thinking was characterised by attributing all economic activity, including the behaviour of apparently impersonal institutions, to the wishes and actions of individuals. It did this by examining choices in terms of their opportunity cost (that is, what is the next best use of resources to that which is being considered?) and by analysing the impact of timing on decision making.

Hayek correctly predicted the failure of Soviet-style central planning. His ideas are said to have inspired many of the free-market reforms carried out during the 1980s in the United States under Ronald Reagan and in the UK under Margaret Thatcher. Schumpeter developed a theory of innovation and economic change characterised by the phrase creative destruction. Autarky The idea that a country should be self-sufficient and not take part in international trade. The experience of countries that have pursued this Utopian ideal by substituting domestic production for imports is an unhappy one. No country has been able to produce the full range of goods demanded by its population at competitive prices. Indeed, those that have tried to do so have condemned themselves to inefficiency and comparative poverty, compared with countries that engage in international trade. Average A number that is calculated to summarise a group of numbers. The most commonly used average is the mean, the sum of the numbers divided by however many numbers there are in the group. The median is the middle value in a group of numbers ranked in order of size. The mode is the number that occurs most often in a group of numbers.

Take the following group of numbers: 1, 2, 2, 9, 12, 13, 17 The mean is 56/7=8, The median is 9, GDP - What does GDP stand for? The Free Dictionary GDP - What does GDP stand for? The Free Dictionary Ground Delay Program (aviation traffic flow initiative) GDP Ground-Delay Programme (air traffic management) GDP General Duties of Pilot (Pakistan) GDP Grounded Into Double Play (baseball) GDP Graduate Development Programme (various locations) GDP Giant Depolarizing Synaptic Potential (neurology) GDP Grand Daddy Purple (marijuana strain) GDP GDP Graphics Display Processor Want to thank TFD for its existence? Tell a friend about us , add a link to this page, or visit the webmaster's page for free fun content . Link to this page: Does GDI point to a stronger recovery? The five metropolitan areas with the lowest per capita real GDP in 2013 were Lake Havasu City-Kingman, AZ; Sebring, FL; The Villages, FL; Brownsville-Harlingen, TX; and McAllen-Edinburg-Mission, TX.

Copyright © 2003-2017 Farlex, Inc Disclaimer All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. Does High GDP Mean Economic Prosperity? Does High GDP Mean Economic Prosperity? {{article.article.images.featured.caption}} Opinions expressed by Forbes Contributors are their own. Full Bio The author is a Forbes contributor. The opinions expressed are those of the writer. Loading ... Loading ... This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe Economists traditionally use Gross Domestic Product to measure economic progress. If GDP is rising, the economy is good and the nation is moving forward. If GDP is falling, the economy is in trouble and the nation is losing ground. From a strictly numerical perspective, GDP provides an easy-to-follow indicator of economic health. From the perspective of a citizen living with the day-to-day realities of life, GDP can be rather misleading.

This is why the Genuine Progress Indicator was created in 1995 by a socially responsible think tank called Redefining Progress. It was developed as an alternative to the traditional GDP measure of a nation's economic and social health. Read on to find out what GDP fails to reveal about a country's economic prosperity and how the genuine progress indicator works to make up this gap. GPI Variables Although GPI and GDP calculations are based on the same personal consumption data, GPI provides adjustment factors - variables designed to apply monetary values to non-monetary aspects of the economy. The variables fall into the following general categories: Personal Consumption - As mentioned, this is the exact same data used to calculate GDP. Income Distribution - GPI is adjusted upward when a greater percentage of the nation's income goes to the poor because an income increase provides a tangible benefit to the poor. GPI is adjusted downward when the majority of a nation's increased income goes to the rich. Housework, Volunteering, Higher Education - GPI factors in the value of the labor that goes into housework and volunteering. It also factors in the benefit of an increasingly educated populace.

Service of Consumer Durables and Infrastructure - Money spent on durable goods is treated as a cost, while the value the purchases provide is treated as a benefit. Long-lasting goods that provide benefits without having to be frequently repurchased are viewed positively. Goods that wear out quickly and drain consumers' wallets when they must be replaced are viewed negatively. GDP, on the other hand, views all expenditures as good news. Infrastructure spending by the government is treated in a similar manner - if spending provides a long-lasting benefit, GPI views it as a positive; if spending drains the government's coffers, GPI views it as a negative. Again, GDP views all spending as positive. Crime - Rising crime costs money in legal fees, medical bills, replacement costs, and other outlays. GDP views this spending as a positive development. GPI views it as a negative. Resource Depletion - When wetlands or forests are destroyed by economic activity, GDP views the events as good news for the economy; GPI views these events as bad news for future generations. Pollution - Pollution is good news for GDP. Industry gets paid once for the economic activity that creates pollution and again when money is spent to mitigate the pollution. GPI views pollution as a negative.

Long-Term Environmental Damage - Global warming, nuclear waste storage and other long-term consequences of economic activity are factored into GPI as negatives. Changes in Leisure Time - Prosperity should lead to an increase in leisure time. Most modern workers would disagree with this theory. GPI views an increase in leisure as a positive and a decrease in leisure as a negative. Defensive Expenditures - Defensive expenditures refer to medical insurance, auto insurance, healthcare bills and other expenses that are required to maintain quality of life. GPI views these as a negative. GDP views them positively. Dependence on Foreign Assets - When a nation is forced to borrow from other nations in order to finance consumption, GPI factors in the result as a negative. If the borrowed money is used for investments and benefits the country, it is viewed as a positive. The Calculations GPI calculations take all of these variables into consideration, using economic statistics and mathematical formulas to place value on them. That value is then added to or deleted from the GDP figure. For example, expenditures on consumer durables are a negative adjustment. Data from the National Income and Products Accounts are used to estimate the cost of consumer durables and the figure is subtracted from GDP.

The amount of money that foreigners invest in the United States is subtracted from the amount Americans invest overseas. A five-year rolling average is used to determine whether the U.S. is becoming a lender or a borrower. If our economy is healthy enough that we are a net lender, the resulting number is added to GDP. If we are borrowing to sustain our economy, the resulting number is subtracted. GPI Is Not Yet Mainstream While GPI factors in many of the variables that have direct impact on peoples' quality of life, capitalist economies tend to focus strictly on making money. Because of this, GPI has not yet been widely adopted in such economies, although its proponents note that it has been reviewed by the scientific community and recognized for its validity. GPI-type measures are in use in Canada and in some of Europe's small and more progressive nations. Over time, other nations might slowly adopt the concept as environmental concerns move into the public's consciousness. --

Question: Which term in economics is represented by the initials GDP?
Answer: Gross Domestic Product